After Xayaburi, it's time for some 'hydro-diplomacy'

05 February 2013 | News story

The groundbreaking ceremony for the Xayaburi dam in Laos on Nov 7 marked the symbolic end to a long and contentious international campaign to delay the dam's construction until further studies into its potential trans-boundary impacts were complete.

According to the strategic environmental assessment (SEA) prepared in 2010 on behalf of the Mekong River Commission (MRC), these studies would have taken at least 10 years. But what was really at stake with Xayaburi? What has the debate over this dam taught us? And where do we go from here?

Local opposition to the Xayaburi dam immediately downstream in Thailand was mostly focused on local impacts. But the project also opened up much larger questions for the region.

The issue is not so much about the direct impacts of the Xayaburi dam (it is too far upstream to have a significant impact on fish migration and consequently fish production in the most productive parts of the river), but that it would set a precedent for a cascade of the planned 11 mainstream dams extending down to Sambor in central Cambodia.

If all of these dams were built, the impacts on food security, particularly in Cambodia's Tonle Sap Lake, which depends on the seasonal flood pulse carrying water and nutrient-rich sediment to drive its extraordinary fish productivity, could be catastrophic. Beyond that, if a significant enough portion of sediment flow was cut off to the Mekong Delta, Vietnam's rice basket could start to sink into the ocean.

The full 11-dam cascade therefore poses an existential threat to the development prospects and political stability of the Mekong region. Common sense dictates that while socioeconomic progress is necessary, it should not be achieved by taking unnecessary risks that threaten ecosystems and environmental services upon which society depends for its well-being.

Seen in that context, debate over the Xayaburi dam is just one step in a long-term effort to ensure that the Mekong is developed in ways that optimise the shared benefits to all riparians without undermining regional peace and security.

How can this be achieved? Firstly, to say that all dams are bad is simply not true. The important questions are about which ones, and what their likely impacts will be. The cumulative and trans-boundary impacts of the 11-dam cascade needs to be assessed in terms of changes in income resulting from reduced fish production and subsidence from reduced sediment flow.

These are complex calculations. Still, current advances in data availability and modelling methods means that much more accurate predictions can now be made, which is exactly what needs to be done in the Mekong region. This will allow clear identification of those dams that pose the most substantial risks.

Secondly, it is important to recognise that asking Laos not to build dams on the Mekong is asking a lot. An economic evaluation of the 11-dam cascade by Portland State University and Mae Fah Luang University found that irrespective of the exact values you assign to the environmental goods and services that would be lost as a result of the dams, the impact on Laos would be limited in comparison to its downstream neighbours. Given that limited downside, it is easy to see that hydropower development makes sense for Laos.

The question then is, should downstream neighbours explore a compensation scheme to offset some of the income that Laos would forego from not building some of the proposed dams? The amount of income foregone may not be as large as might initially be expected. Xayaburi, for example, is a build-own-operate-transfer project that will generate a few tens of millions of dollars a year in revenue to the government during the first 30 years. While not insignificant, such sums are tiny relative to Vietnam's existing investments in Laos, and miniscule in comparison to the value of regional trade.

Moreover, given international interest in the region's prosperity and stability, it may be possible that Vietnam could secure co-financing from its development partners to support such an initiative.

If Cambodia, Laos, Thailand and Vietnam can agree, first, not to proceed with the riskiest dams and, second, to explore a compensation mechanism to offset some of the forgone revenue of un-constructed dams, it may be possible to formalise an agreement. This could come through either a revised 1995 Mekong Agreement, the 1997 UN Convention on Non-navigational Uses of Waterways, or some other legal mechanism. Key to such an agreement would be the inclusion of a provision obliging the parties to refer decisions to an independent arbiter in the case of irreconcilable disagreement.

The 1960 Indus Waters Treaty between India and Pakistan, for example, includes a provision to refer such disagreement to the International Court of Justice. Despite three wars between India and Pakistan since 1960, the treaty stands. While no use has been made of the recourse mechanism, it gives both parties confidence that if their vital interests are threatened, a process is in place to resolve the dispute.

Vietnam is in a strong position to lead such a process, and its development partners including Finland, Australia, Sweden, and US might even be willing to provide technical and financial support to a process of "hydro-diplomacy" involving all the countries of the Lower Mekong that would culminate in a legally binding agreement.

Such an agreement would have to:

- Recognise the rights of all parties to harness the Mekong for development without causing large-scale irreversible trans-boundary impacts.

- Provide a legal basis and institutional mechanism for conducting cumulative and trans-boundary impact assessments using robust and agreed upon standards for all proposed mainstream dams.

- Provide a legal basis and institutional mechanism for compensation payments for offsetting foregone revenue of not developing some mainstream dams.

- Provide a legal basis for the assessment and payment of claims for compensation arising from trans-boundary impacts of dams that are developed.

- Provide an independent recourse mechanism in the case of irreconcilable disagreements between parties.

While there has been no official announcement on why Vietnam withdrew its objection to Xayaburi at the most recent meeting of the MRC Council in Luang Prabang on Jan 15-17, the Vietnamese delegation argued that there should be no further developments on the mainstream until the results of a four-year study are available. The five-point hydro-diplomacy approach described above would support this effort while providing additional security if the results of the study were disputed.

The region would benefit by taking a "whole Mekong" approach. A few days after the Xayaburi groundbreaking ceremony, the Cambodian government announced that a contract to build the Lower Sesan 2 (LS2) dam had been signed. Studies show that from a social and environmental point of view, LS2 is of much higher concern than Xayaburi because it would block the Sesan and Srepok, two of the Mekong's largest tributaries, and could result in major reductions in both sediment flow and fish production. A study by Ziv et al of 27 dams that have construction planned between 2015 and 2030 on the Mekong's tributaries ranked LS2 as the most damaging with the least benefit because it would generate relatively little power (400 megawatts) while reducing fish production by 9.3%. This may not sound much, but considering that a large number of Cambodia's nearly 15 million people depend on fish from the Tonle Sap for a significant proportion of their animal protein consumption; even a modest reduction could threaten the food security of millions.

It is important to note that civil society organisations are becoming increasingly influential in the region. As they expand and strengthen national and international networks, their influence on hydropower decision-making will only increase. This is particularly true in Thailand and Vietnam, currently the two largest electricity consumers in the riparian countries of the lower Mekong. At least in the immediate future, decisions by Thailand and Vietnam will determine which dams are built and which are not. Civil society, especially in these two countries, will have a role to play in the unfolding debate.

The reality is that the debate over the future of the Mekong has only just started. If in 20 years a binding regional agreement is in place that identifies dams that have been scientifically assessed as "high risk" and prevents their construction, that would be considered a successful outcome. It would benefit all countries in the region through environmental security and strengthened political relationships.

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By Jake Brunner, Programme Coordinator of IUCN for Vietnam, Cambodia and Myanmar; and Dr Robert Mather, Head of IUCN Southeast Asia Group.